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San Francisco-based fintech firm Ripple has published a proposal to include federated sidechains that will be connected to the XRP Ledger (XRPL). The idea is that each sidechain would operate as its own blockchain thus helping preserve the XRPL’s leanness and efficiency for cross-border payments.

Sidechains Will Enable Implementation Of Smart Contracts Without Compromising Focus On Payments

In a blog post, Ripple CTO David Schwartz indicated that developers that contribute to the XRP network have been incessantly requesting the smart contract feature as a result of the flourishing decentralized finance sector. But for Ripple execs, maintaining the high efficiency of the XRP ledger is key. As such, he has proposed federated sidechains that will allow developers to implement new features while keeping the ledger secure and efficient.

The sidechains will have their own ledger and transactions just like the XRPL. This means that the sidechains will expand the functionality of the XRP ecosystem by providing interoperability for native smart contracts and other important use cases by using the federator software.

David Schwartz noted that Ripple will need to make two small changes to the operation of the XRP mainnet in order to integrate the federator software strategy. Ripple will also be required to add new features to the XRPL server software so as to allow it to operate in a sidechain, although these features will not be enabled on the XRP Ledger itself.

Anyone Can Run Sidechains To The XRPL

Notably, this particular federator software will allow anyone to run a sidechain to the XRP mainnet. It will be connected on one side to the XRPL and to one or more sidechains on the other side. Furthermore, the sidechains can use their own native asset or use XRP. Schwartz also posited that the federator software will allow the movement of XRP and issued tokens from one chain to another. 

As for who is eligible to run the federator software, Schwartz opined that it would only be participants that operate validators on at least one sidechain. He further said that each of the sidechains will have a “trust account” on the XRP Ledger, adding:

“This account can hold assets on the XRPL on behalf of users of the sidechain. The account would use a multisign or threshold key with the signers being the validators of the sidechain. Each sidechain validator operator registers a signing key that signs transactions on XRPL; thus, the validators of the sidechain can collectively create transactions to manage the sidechain’s Mainnet account.”

The Ripple CTO is urging developers and the XRP community to review the federated sidechains strategy and give their feedback. All in all, the proposal promises endless possibilities for the XRP Ledger.


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